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Helix Energy Solutions Group, inc (NYSE:HLX)
Q3 2021 Earnings Call
Oct 21, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

[Operator Instructions] Greetings and welcome to the Third Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Thursday, October 21, 2021. I would now like to turn the conference over to Erik Staffeldt, CFO. Please go ahead.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Good morning everyone and thanks for joining us today on our conference call for our Third quarter 2021 earnings release. Participating on this call for Helix today are Owen Kratz, our CEO; Scotty Sparks, our COO; and Ken Neikirk, our General Counsel; and myself. Hopefully, you've had an opportunity to review our press release and the related slide presentation released last night. If you do not have a copy of these materials, both can be accessed through the For the Investor page on our website at www.helixesg.com. The press release can be accessed under the Press Releases tab. And the slide presentation can be accessed by clicking on today's webcast icon. Before we begin our prepared remarks. Ken Neikirk will make a statement regarding forward-looking information. Ken?

Ken Neikirk -- Senior Vice President, General Counsel and Corporate Secretary

During this conference call, we anticipate making certain projections and forward-looking statements based on our current expectations. All statements in this conference call or in the associated presentation other than statements of historical fact, are forward-looking statements and are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Our actual future results may differ materially from our projections and forward-looking statements due to a number and variety of factors, including those set forth in Slide 2 in our most recently filed Annual Report on Form 10-K and in our other filings with the SEC. Also during this call, certain non-GAAP financial disclosures may be made. In accordance with SEC rules, the final slide of our presentation provides reconciliations of certain non-GAAP measures to comparable GAAP financial measures. These reconciliations along with this presentation, the earnings press release, our annual report and a replay of this broadcast are available under the For the Investor section of our website at www.helixesg.com. Owen?

Owen Kratz -- President and Chief Executive Officer

Good morning. We hope everyone out there and their families are doing well, healthy and staying safe. This morning, we will review our Q3 and year-to-date performance, our operations, our view of the current market dynamics and provide our outlook for the balance of '21. We will also discuss the underlying market environment and how we think it will influence 2022 and beyond.

Moving to the presentation slides 5 through 7 provide a high level summary of our results. Our performance for the quarter and year-to-date continues to be in line with expectations as our teams continue to execute at high levels of upper -- operationally [Phonetic]. The Q7000 continued successful operations in West Africa. North Sea Intervention activity increased with both vessels, the Well Enhancer and the Seawell working parts of the third quarter. Gulf of Mexico intervention continued to improve. We benefited from increased utilization and have visibility for work into Q1 of '22. In Brazil, the Siem Helix 2 worked the entire quarter. The Siem Helix 1 completed its contract with Petrobras in August. The vessel was in dry-dock at the end of the quarter. Robotics benefited from the good weather season in the North Sea with increased activity in trenching and site clearance work. And production facilities continues to be a steady performer benefited from the production enhancement efforts completed on our Droshky field during Q2 with increased production. Our results for the third quarter of 2021 were largely in line with our results from the second quarter of 2021. Revenues were report -- reported $181 million with a net loss of $19 million and EBITDA of $27 million. Our gross profit was $3 million or 2%.

On to Slide 8. From a balance sheet perspective, our cash balance at the end of the quarter was $238 million with an additional $71 million in temporarily restricted cash associated with the short LLC -- short term LC for our work in West Africa. During the third quarter, we generated $29 million of operating cash flows and spent $1 million on capex, with the resulting free cash flow of $28 million. Year to date, we've generated $121 million of operating cash flow and $114 million of free cash flow. During the quarter, we entered into a new $80 million asset-based revolving credit facility and paid off our term loan. We achieved a long-standing financial goal of ours by reaching net debt zero and ended the quarter with a negative net debt balance of $4 million. I'll now turn the call over to Scotty for an in-depth discussion of our operational results.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Thanks, Owen, and good morning everyone. Moving on to slide 7. We continue to operate all of our business lines through a challenging year with the ongoing COVID 19 pandemic. Both onshore and offshore, our teams have done a phenomenal job keeping our operations functional and safe. Our office and facilities in Houston and in Aberdeen are open and fully operational, and shortly we will commence reopening our offices in Rio and Singapore. Safety measures and protocols remain in place and the team's compliance to these allow safe access to work in these locations. The COVID-19 pandemic still presents many logistical challenges. However, we continue to successfully transport personnel to our work sites globally. We are keeping our protocols, testing and screening our personnel, subcontractors and clients at each offshore work location. Most of our personnel where the vaccine is available have been vaccinated and we are now seeing less COVID-19 related incidents at our work sites. In some parts of the world travel restrictions have been eased and most clients are returning to their offices. And finally after all these months, some clients are now allowing in-person meetings. In the third quarter, we continue to operate 14 vessels globally with minimal operational disruption, continually operating at exceptional standards with 98.5% uptime efficiency. Our dedicated and committed personnel continued the third quarter with very satisfying and notable safety statistics again, emphasizing our strong supportive safety culture and leadership globally.

On to Slide 11. During the third quarter, we produced revenues of $181 million resulting in a gross profit margin of 2%, producing a gross profit of $3 million, producing EBITDA for the third quarter of $27 million compared to $162 million revenue, $3 million gross profits and EBITDA at $25 million in the second quarter. In the third quarter, the well intervention fleets achieved utilization of 72% globally with 72% utilization in Brazil with the completion of the long-term Siem Helix 1 contract for Petrobras. Utilization increased to 74% in the Gulf of Mexico with 57% utilization in the North Sea and utilization increased to 100% in West Africa. The Robotics chartered-vessel fleet achieved utilization of 99% globally, increasing to 358 vessel days during the quarter compared to 236 days in the second quarter. In the Gulf of Mexico, we had both the Q4000 and the Q5000 working with increased utilization over the second quarter with some scheduled gaps between projects working for numerous client. In the North Sea, the Well Enhancer was operational prior to being warm stacked for part of the quarter, and the Seawell was again reactivated to onsite projects prior to returning to warm stack mode. In West Africa region, the Q7000 had an impressive quarter working in Nigeria for two clients undertaking production enhancement works. Operating performance in Brazil was at the usual high standard with the Siem Helix 1 safely completing works with zero [Indecipherable] and then demobilizing from the Petrobras contract. The Siem Helix 2 was 100% utilized producing a strong quarter. The Robotics chartered-vessel fleet achieved high utilization in the quarter working between ROV support, trenching and renewable works globally, completing 358 days.176 days work was undertaken on four projects using spot charter vessels, including one vessel conducting our first project offshore Guyana.

Slide 12 provides a more detailed review of our operations for our Well Intervention business in the Gulf of Mexico. The Q5000 increased utilization to 77% compared to 72% in Q2, performing production enhancement operations in ultra deepwater for three clients with some small scheduled gaps between projects. The Q4000 increased utilization to 71% compared to 45% in Q2, completing production enhancement works for two clients in ultra deepwater followed by two small construction projects for two clients. Additionally, we provided aid to one of our clients with platform repair work caused by storm damage from Hurricane Irene. Both Q units have integrated Helix from J-line's teams and equipment installed proactively working as one complete productive and safe team. Most of our Q unit Intervention contracts undertaken in the Gulf of Mexico and our single point contract mechanism allow for easier contracting for our clients. In the third quarter, the Helix 1 J-line's team was successful in being awarded the BP Gulf of Mexico riser based well intervention vessel and services package for a three-year quota contracts plus options. Whilst the contract does not provide a guaranteed days, we are told we have the contractor of choice for any riser based interventions for BP in the Gulf of Mexico and we do expect [Indecipherable] utilization for one to three wells each year. Pleasingly both vessels of high utilization contracted work in Q4 with contracted and awarded works into 2022 and much better visibility potential further up to 2022 compared to 2021. And in recent weeks, we've been awarded approximately 250 days for the Gulf of Mexico Q units from nine clients to work in the fourth quarter and the first quarter of 2022.

Moving to Slide 13, our North Sea Well Intervention business continues to be most affected by reduced work opportunities related to COVID 19. The Well Enhancer achieved 57% utilization in Q3 working for two clients in the quarter, including completing production enhancement scopes. The vessels in warm stacked in Leith, Scotland significantly reduced in vessel operating costs and crew levels. The Seawell achieved 56% utilization working for three clients, the vessel completed the diving scope for one customer and completed production enhancement works for the following customer followed by full [Indecipherable] abandonment program for the third customer. The vessels [Indecipherable] warm stacked in Leith, Scotland's significantly reduced cost and reduced crews for the remainder of the quarter. The Q7000 had a strong performing quarter in Q3. The vessel performed extremely well working with the multinational and integrated Helix from J-lines team. The vessel worked on two wells in the quarter for two clients and now has contracted work in Nigeria well into Q4 with a potential further works identified at the end of 2021 and in 2022.

Moving to Slide 14. In Brazil, both vessels achieved strong performance with zero commercial downtime in the third quarter, the Siem Helix 1 at 45% utilization in Q3 with no commercial downtime for the safe completion of the Petrobras contract and demobilization in mid-August. The vessel completed abandonment work on one well and production enhancement works on two additional wells. The vessel has completed its planned five year regulatory maintenance docking period, and our focus is now on pursuing other works for the vessel in Brazil and other markets internationally. We have identified and are in discussions regarding numerous opportunities that we hope will have the vessel contracted in the coming months. The Siem Helix 2 had 100% utilization and completed abandonment work on three wells and production enhancement work on two wells during the quarter. We are currently discussing the possible expansion with Petrobras regarding the Siem Helix 2 but the outcome of those discussions remains to be seen, and we are identifying other opportunities globally.

Moving to slide 15 for our Robotics review. Robotics had another good quarter continue -- continuing another good year in 2021 operating six vessels during the quarter primarily working between trenching, ROV, decommissioning, non-oil and gas and renewables related projects. In the APAC region the Grand Canyon 2 had 100% utilization in Q3. The vessels contracted in Thailand undertake an unexpected 210 days [Indecipherable] decommissioning projects removing 125 robots from the sea floor and is expected to continue into Q1 of 2022.

In the North Sea, the Grand Canyon 3 was utilized 98% undertaking two oil and gas trenching projects, a renewable trenching project for another client, and the teleconference project for a new client. The vessel has contracted oil and gas and renewable trenching scope utilized in the vessel for most of the remainder of 2021 and a good portion of 2022. The chartered vessels in the [Indecipherable] continued site clearance and survey works for 53 days on a wind farm project that is now expected to last until late Q4. The project started [Indecipherable] commenced work on a [Indecipherable] clearance and detonation projects for 46 days, and is also expected to continue into the latter part of Q4.

In the Gulf of Mexico, ROV activity remains strong and we continue to market this [Indecipherable] vessel going forward this year. The project chartered Siem Dorado was contracted for a cable installation projects on our first offshore work Guyana for 77 days in the quarter. The Robotics Group transition further into the green renewable sector continued adding new clients and more services. We have recently been contracted to undertake further site clearance and survey projects and our teams [Indecipherable] increased for all the services we provide globally. We've also recently been awarded further renewable trenching works in 2022 and 2023 that may require a second tranche investment in '22.

Over to Slide 16. I'll leave this slide detail in the vessels ROV and trenching utilization for your reference. Before I close, I would like to mention some other key points. We have commenced programs to reduce our carbon footprint and greenhouse gas emissions across all of our business regions, and recently appointed a senior manager the take on the plans and work closely with our operations and sustainability teams. It is also very pleasing to see far better visibility across our business lines, especially within the Gulf of Mexico, Brazil and our newer international markets. Tender activity has increased and the number of available working days appears to be recovering. We've added to our salesforce in many areas recently, and within the Robotics we continue to increase activity in the green and renewables markets and we expect an increased trenching activity and favorable [Indecipherable] services we have been offering. Before I turn the call over to Eric, I would again like to thank our Helix Global team, our offshore personnel, our onshore personnel and our partners who continue to innovate and evolve and doing a fantastic job under these challenging circumstances and [Indecipherable] operational excellence with minimal NTT while keeping very high standards in safety performance.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thanks, Scotty. Moving to slide 18, it outlines our debt instruments and their maturity profile at [Technical Issues] our total [Technical Issues] $340 million at the end of Q3. Our next scheduled principal payments are in 2022.

Moving on to slide 19. This slide provides an update on key balance sheet metrics, including our long-term debt and net debt levels at year-end and September 30th. With $309 million of cash and restricted cash as of September 30, we are in a negative net debt position of $4 million at quarter end. Our cash position at the end of Q3 was $238 million with an additional $71 million of restricted cash that supports a temporary project LC. During the quarter we paid off our term loan and entered a new $80 million ABL revolving credit facility with availability driven primarily by our US and UK-based receivables. At quarter end, we had no amounts outstanding and 70 million of availability under the ABL.

For a discussion on our outlook we move to 22, 23. We continue to operate in a challenging market, our customers continue to be very cautious in committing to spend in '21. The currently relatively stable macro backdrop has increased customer interactions and increased activity in regions like the Gulf of Mexico, but it has been slow to develop in areas like the North Sea one Intervention market. The positive development globally and within our sector are providing a positive foundation for recovery in our markets for primarily beyond 2021. We have made slight updates to our Q2 guidance. Our guidance is a good-faith attempt to provide investors information that is appropriately caveated as best we can against the backdrop of the current environment. Our guidance for '21 is as follows:

Revenues $600 million to $645 million, EBITDA $85 million to $100 million, and free cash flow $80 million to $120 million. Our EBITDA outlook is based on the following. We expect visibility utilization will continue to be on a quarter-to-quarter basis. We have increased the bottom end of our EBITDA range based on work that has been contracted into Q4. We have also increased our cash flow forecast. Our free cash flow outlook is supported by the strong year-to-date cash generation and highlights both the challenges in the range of possibilities during the fourth quarter. Range provided acknowledges the expected range of Q4 EBITDA and the range of our annual capital spending of $15 million to $25 million. We received approximately $12 million CARES Act tax refund in Q3. Working capital levels are assumed to support the 2022 activity.

To provide a bit more color to our key assumptions by segment and region on Slide 22, first our Well Intervention segment. In the Gulf of Mexico intervention business both vessels have contracted work in Q4 extending into Q1 2022 with expected high utilization. In the North Sea Well Intervention business both vessels are stacked with limited opportunities in Q4. In Brazil, the Siem Helix 2 is on contract into December, the Siem 1 completed its dry-dock in mid-October and is available in the spot market. In West Africa, we expect to work the Q7 into late Q4 with possibilities thereafter.

Moving to our Robotics segment on Slide 23. Robotics will continue to be steady early in the quarter. Project in the North Sea will likely begin to taper off with the coming winter months. The Grand Canyon 2 in APAC is on contract in Thailand into Q4 and possibly longer. Vessels are expected to have strong utilization for the balance of '21 in that region. The Grand Canyon 3 is contracted to be performing trenching in the North Sea with expected strong utilization in Q4. To follow on wind farm survey and site clearance in -- the North Sea is not continuing into Q4. Moving to production facilities, HP one is on contract with no expected change. Production facility should benefit from the Droshky production and our agreement with HWCG.

Continuing on slide 24. Moving -- just [Indecipherable] our capex forecast range is $15 million to $25 million. The majority of our capex forecast is maintenance and project related. It also includes the production enhancement opportunity at Droshky completed in April. The downward revision for capex is based on timing shifting into 2022. Reviewing our balance sheet, our funded debt decreased to $314 million with our retirement of our term loan cash position at the end of Q3 was $238 million. This does not include the $71 million of temporarily restricted cash that supports our project LC. We have received $7 million tax refund in Q1 and the $12 million in Q3, a product of the tax changes from the CARE Act. As previously stated, we achieved net debt zero during Q3 and ended the quarter with a negative net debt of $4 million.

I'll skip Slide 26 for your reference. At this time, I'll turn the call back to Owen for closing comments. Owen?

Owen Kratz -- President and Chief Executive Officer

Thanks Erik. Like many businesses globally, parts of the Helix strategy were necessarily deferred due to COVID and the resulting downturn, but essentially it's not changed we'll endeavor to deliver free cash flow, once we're confident about the market outlook and our ability to meet all obligations we plan to start to return value to shareholders through dividends or share repurchase. We've been focused on positioning our balance sheet to assure being able to weather the storm of what we believed would be a prolonged downturn. This belief was based on the oversupply in the OFS market that might hinder our recovery cycle once COVID impacts subsided. However, things are never simple. In addition, we're seeing COVID linger longer than many believe, we're seeing a significant pivot to renewables impact in traditional recovery type capital allocations, and we're seeing a meaningful divestment of producing fields to newer producers with the requisite digested period. Having said all that, the pendulum often swings too far and some are beginning to notice. Our balance sheet is strong and we're starting to see signs of recovery. It may not be a hockey stick but over the next few years we believe the recovery will be robust. We're seeing this across all of our markets with each region having some variations. The North Sea is usually the first to fall off and the first to recover, this time seems a bit different. Many properties have changed hands. COVID shutdown seems to have had a significant impact on planning and the Green Party now shares more power. The result has been a slower pickup in the North Sea work, is that this is a new material basin. So we are seeing and expect to continue to see a pickup in production enhancement work. There's also been a shift in the government position from wanting to preserve infrastructure to promote marginal production development to a public driven stands to want more field abandonment and removal. Since the government will be on the hook for -- to fund a portion of this, we're seeing the direction from them is to take an over time approach. We expect field commissioning to grow and remain a strong market over time. Helix is well positioned, and we plan to take steps to expand our presence in this niche, not only with our current [Indecipherable] capability in the North Sea, but with the introduction of the first non-rig riser based assets in the North Sea. The Gulf of Mexico was severely impacted by COVID and the drop in the commodity price in 2020. We were fortunate to have had a legacy contract with BP that was originally signed back in 2013. That contract came to an end of this year and the market is reverting back to a more traditional spot market. This negatively impacted the results from our two Gulf of Mexico assets this year. Fortunately, the visibility on demand is increasing and the potential exists that both assets will be highly utilized in 2022. Our rates are still relatively low as we were impacted by the alternative rig rates. However, rig availability has tightened and most forecasts are for a significant improvement on rig rates, which is starting to happen. With that, we expect improvement through 2022 and a strong 2023. We've also broadened our surface offering to include hydraulic stimulation. We did this initially the Baltzar bolster utilization, but it may actually grow to be a new market for us as the volume of work increases. In 2014 following the downturn of 2015 we began a strategy to increase demand for our services by expanding geographically. Brazil was the first region that we targeted to establish a presence in. We were able to achieve four year contracts for two monohull riser base Intervention vessels. We were the first in our industry to history to successfully deploy a non-rig monohull developed for riser based innovation and intervention. These vessels remain the only non-rig monohulls available with that capability along with the Well Enhancer.

The first vessel, the Siem Helix 1, has now completed its four year contract and the Siem Helix 2 contract expires at the end of the year. There has been a significant amount of field divestment by Petrobras. The result is that there is a growing client base for our services other than Petrobras Our intentions are to redeploy the SH1 out of Brazil for most of 2022. We are in negotiations with Petrobras for an extension of the contract for the Siem Helix 2. Our intent is to keep the SH2 in Brazil. We believe there is a long-term market there for at least one of our vessels. In late 2019, we deployed our first major asset in West Africa, the Q7000 to Nigeria. After a COVID delay, we continued work in earnest at the start of 2021. The West African market is a prime market for primarily production enhancement. We expect strong demand for this service in the region. We initially believe that there is potential for 150-day campaign every other year. The Q4 -- the Q7000 has worked continuously however throughout the year with very little non-productive time. We have visible work in Nigeria, potentially through the first half of 2022 and that's just Nigeria. And we're now starting to market and gain interest from the Angolan market is -- which is potentially even larger. We believe the West African market has the potential to fully utilize one of our riser base assets on a permanent basis.

The latest region that we've been working toward establishing a presence in is the Asia-Pacific market. This market has trends -- transitioned over time from the development market to be one that in the future we anticipate will be dominated by field abandonment work. The Australian government is increasingly demanding to see decommissioning occur following a significant bankruptcy which left the decommissioning liability with the government. We expect this to be a strong market which could potentially utilize one of our assets on a permanent basis. We already have our first contract in place in Australia. Although the start of the work has been delayed, now expected in the second half of 2023. We expect this will provide the opportunity to secure additional work likely ahead of that time or after. As you can see we have multiple sources of potential utilization. We have seven intervention assets, two vessels in the North Sea and two vessels in the Gulf which we'll continue to support these regions with expected improvement on utilization and over time significant improvement on rates. For the remaining three assets, although we're not there yet we see demand eventually to exceed our supply.

To recap, we see one vessel in the North Sea supporting riser base decommissioning one vessel supporting production enhancement in Nigeria and Angola, one vessel supporting decommissioning work in Asia Pacific, and one or two vessels in Brazil. Beyond that, the potential market is developing in Guyana and we're seeing further actively -- activity potentially in the Mediterranean in Canada. Rates are below where they need to be but we're generating free cash flow. We're seeing gradual improvement in rates off -- by the lot of the legacy rates on our three long-term contracts. We are anticipating meaningful rate increases by 202. Between a variety of global utilization opportunities and the chance for meaningful rate improvement, we feel the market offers us a lot of upside. It is incumbent upon us to prioritize those decision points and deliver results.

To try and give some color on our Robotics Group, let me begin by saying that this is where we report our involvement in the offshore wind market. There are four components of our Robotics contribution, ROVs, vessels with ROVs, ROVs in support of our Intervention vessels and trenching in the UXO Boulder clearance. Trenching in UXO Boulder clearance is derived from the offshore wind market. It's a bit lumpy as is the market, but the expected EBITDA contribution on a lumpy basis is anywhere from $8 million to $20 million a year. We have plans to increase our volume of work in these niches, as well as expand our offering and capabilities for site assessment and prep beyond UXO Boulder clearance with relatively low capital cost. Of our world-class ROV were roughly half plus and minuses in support of our intervention assets. If and that doesn't utilization improved so will this segment. The remaining work for our world-class ROVs is from providing ROVs on vessels of opportunity to our ROVs third-party vessels in support of construction support primarily with the potential [Indecipherable] work from the offshore wind market. Expanding our involvement in the offshore wind market is the goal for us but we plan to be prudent and avoid EPC works or provision of new vessels other than those we already operate. As I stated at the beginning, our strategy is to increase free cash flow and then return value to shareholders. The tactics we intend to focus on to achieve and increasing free cash flow are, one, increased demand for our assets through geographic expansion, increased demand results in greater utilization, which results in pricing leverage, which would be in addition to demand leverage from us -- from simply a market recovery. Two, will expand our offerings and field decommissioning. First, we are developing technologies that provide a step change in capability with our existing assets for decommissioning. And second we will launch an aggressive new marketing campaign highlighting our broadened decommissioning capabilities. Three, we have potential to reduce our operating costs and we'll pursue the cost reductions. Four, we'll explore and implement plans to expand our offerings to the offshore wind market in a prudent manner steering clear of the risky and low margin vessel in EPC niche. And five, we will maintain capital spending discipline with a focus on return on capital for any potential expenditures. The next year will be a transition year for us as we further establish in these markets and redeploy our three non-North Sea or Gulf of Mexico assets. We may accept some lower than cost contracts during 2022 to bridge as we build the demand that's listed here and including the potential for servicing wind farm developments. We see work building. 2022 may be a transitional year initially -- but we have initiatives that are in place and a bright future beyond. With that, I'll turn it back for questions.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Operator, at this time, we'll take any questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of James Schumm with Cowen. Please proceed with your question. H

James Schumm -- Cowen and Company -- Analyst

Hey, good morning guys. Thanks for taking my question. So, Owen, you touched on this, but my first question was to ask about some additional color on the market in Brazil. Petrobras has been selling some non-core assets and so that potentially reduces their well Intervention needs, but presumably now you have a new opportunity from new clients. So can you just talk a little bit about that. You mentioned a digestion period. So could you explain that? And then just wondering if these new operators might prefer local Brazilian competitors. I know there's a lot of old rigs down there that have accepted some very low day rates. So just curious to get your thoughts on all that.

Owen Kratz -- President and Chief Executive Officer

Okay. Well, first, the digested period that I was talking about applies more to the North Sea than Brazil where you've had a large number of properties divested into the hands of smaller companies and there's been some consolidation which will take some time for the integration and everything to occur. With respect to Brazil, I think the divestments occurred a couple of years ago that are really leading in -- to assume that there is visible work. In fact we're tendering on anywhere from two to four years worth of work that's not Petrobras related. So that's a real potential. I don't know that all of the properties that the Petrobras has divested has lessened their demand for intervention though, they still have very high requirement to increase their production, and well intervention is the lower improved method of achieving that. So I think Petrobras is our -- serious about their intent to extend the current contract. We just saw a mid-June arrive at rates that are that trigger.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

James, I'll add to that. Good morning. Just a couple of things where Petrobras is well count is significant in size and currently after the divestitures, they should have a well count in similar size, the entire North Sea or the UK section of the North Sea. And you mentioned that -- the local rig rates. The local rigs have all been taken out now, they were contracted, and any rigs coming [Technical Issues] would be international mobilizations. So we do see a tightening market and like Owen says, we are in quite significant tender activity in Brazil.

Owen Kratz -- President and Chief Executive Officer

And then finally, the most of the people that the divested properties to our international [Indecipherable] therefore as far the strict requirements for local content and I think as long as you comply with the local content requirements, which we do, then there is no real preference between our Brazilian and -- remember we've been down there for a number of years right now, and we do have an established Brazil -- Helix [Indecipherable] Brazil [Indecipherable].

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Or most of our onshore employees in Brazil are local nationals and a good portion 70%, 75% on the vessels are internationals.

James Schumm -- Cowen and Company -- Analyst

Great, thank you for that. And so, just to sort of follow up on that. So maybe putting Petrobras aside and you talked about the overall well count. It is a huge market down there, is there any reason other than your negotiations with Brazil, I mean, presumably that should be a two vessel market for you guys at some point in the future, but for now you're going to move the Siem Helix 1out of there. Is that fair? Is it fair to think that it might get moved back in 2023?

Owen Kratz -- President and Chief Executive Officer

That's correct, and in fact I'd say may be a little earlier, I think we -- you might see us move it back depending on the contract negotiations that are going on right now. It could be that we move the vessel back toward the end of 2022. But I do see at least a two vessel market potential in Brazil. And quite honestly Petrobras should have two vessels and there's probably enough work considering the overlap of the schedules of the work that we have visibility on is probably in the market for two vessels outside of Petrobras.

James Schumm -- Cowen and Company -- Analyst

Okay, great, thanks. And my last question is just, I guess, I think a lot of people have been surprised that oil prices are very high now. A lot of these operators pay you guys out of their opex budgets not capex. So I guess a lot of people are sort of thinking, you would have a more robust demand environment right now. Just curious, are you seeing increased competition for your services from like riser less light well intervention vessels or are you seeing increased competition from drilling rigs or anything related to that.

Owen Kratz -- President and Chief Executive Officer

So let me take that light well intervention vessel. First, we were the first to develop the light well intervention capability with this both vessels -- those two vessels still dominate the work in the North Sea. We do see potential competition in the North Sea, but we've been taking competition for a number of years. Island offshore has had four vessels, three of them working in the North Sea. So that's not new. But Ireland is sort of diminished and you've seeing others stepping up. And you'll always have people stepping up. Riser less intervention is fairly simple to deploy on the vessel of opportunity and therefore downturns, you usually see, but that's a alone speaking to increase their utilization by offering riser less intervention of the vessel. Typically what happens is the producers will try it doesn't go that well and then they revert back to but specifically. In the rest of the world we are seeing. Yes, there has been several attempts in the Gulf of Mexico to provided Roger list intervention. BP more recently has sort of taken up the banner and they intend to use riser less intervention, which is what led partially to the restructuring of the contract that we have with BP. We are not going to be doing the riser less intervention for them, we will be doing the riser base intervention for them. And then in the road -- in Asia Pacific, we are seeing one competitor who don't have an asset finished, they are of marketing that there'll be available but I believe they have a five year call off agreement with Chevron. So we will see riser list in Asia Pacific, but there is a vast difference between demand for riser lists and demand for riser base. The capabilities of riser base are so much greater have been lists. And if you look at the efficiency of running the systems is not that different, and actually the commerciality of riser versus riser lists. But we can offer both. We've just been doing it for decades now and we're a firm believer that riser base to provides the producer with the greatest service.

James Schumm -- Cowen and Company -- Analyst

Great.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Let me add to that as well. Just one key point here is the hugely developing decommissioning market cannot be furnished by rise of intervention, you have to have riser based operations to undertake full P&A activity and the commissioning activities. We've seen an increase in P&A activity in Australia and Brazil and in the Australasia -- sorry North Sea. So huge, huge demand coming for P&A activity that can't be furnished by riser list intervention.

James Schumm -- Cowen and Company -- Analyst

Great, thank you very much, I'll turn it back.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Igor Levi with BTIG. Please proceed with your question.

Igor Levi -- BGIT Research -- Analyst

Thank you, guys, and good morning. When I look at the Gulf of Mexico Q vessels working largely in the spot market, utilization is averaged in the 70% range for much of the year. So my first question is whether this is a reasonable assumption going into 2022 for those vessels. And then as we try to think about the Siem 1 now being in the spot market after leaving Brazil, what kind of a utilization can that vessel expect.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Hey, good morning. So the Gulf of Mexico, in the last quarter we had about 70 odd percent utilization increased from Q2. We are seeing very strong utilization into Q4 and Q1 of next year. Usually, as we go into a new year, we would see about 700 odd days of visibility for the Q units in the Gulf of Mexico, obviously we wouldn't -- we know that work in somewhat would get canceled. Going into 2022 we're seeing much higher visibility over the thousand-days mark, and we have pretty much the vessels booked for all of Q4 now going forward and well into Q1 and numerous discussions with other clients.

Regarding the Siem Helix 1, we are -- as Owen said we would take it out of Brazil. And we are financed to mobilize that vessel on a number of different types of work we're looking at all sorts of opportunities before we see the P&A market reactivates coming into 2023. So I think Owen alluded to that we might take lesser works that we're looking to, wind farm work, vessel construction work, might be even trenching work, but we've got quite a few opportunities for that vessel. And it might be that other countries I think [Indecipherable] open up and we go back into loans expansion mode.

Igor Levi -- BGIT Research -- Analyst

Great. Thank you. And I know you talked about the wind opportunity, but I was hoping you could provide more color going into 2022 because I remember you previously mentioned that, well, it's a growing market. The competition is quite fierce there. So I was hoping to understand how 2022 compared to 2021 in that scope of work and are you -- how are you staying disciplined to maintain margins in such a competitive market.

Owen Kratz -- President and Chief Executive Officer

Well, '22 -- or '21 is actually a down year from '20 and that's the result that we achieved our first UXO Boulder clearance contract in 2020. Quite honestly, the survey grossly underestimated the number of UXO sales and boulders and that track ran most of that year and into the next year. So that was sort of a banner beginning. This year we've been working hard to take the credibility from that first job and qualify to tender on additional jobs. The volume of work this year available, as I mentioned in my comments, it's a bit lumpy. And 2021 was a softer year volume wise for the work, but we were able to secure new contracts and that's bolstered our credibility and we're now on the tender list for most of the work going forward in that area. When I said that we were going to grow. It's not only growing and chasing the UXO and Boulder clearance work and trenching. Boulder clearance work is site preparation -- site clearance, site prep. I think there is an opportunity for us to expand on our services there through alliances and organically with minimal capex to be able to provide a broader side assessment service to the project owners. That's working for the project owners while the competition is fierce. So it is a specialty niche. And I think [Indecipherable] demands a better margin than the more commoditized segments. And on the construction support, which is where trenching is, we -- again, this was a bit of an off-year but we're seeing strong demand increase in trenching. In fact I think Scotty mentioned we're actually contemplating adding trenching capability going forward so that niche will grow. Because of the expertise required there, I think we've been successful in maintaining our margins. And while the number of vertically integrated trenching that's been added to cable layers has sort of diminished the number of clients we work for, the broader market is growing at a much faster pace than the market share that we're losing. So therefore our outlook is for a strong growth in that segment. And then beyond that, just in general we've seen recent headlines this year about EPC contractors taking huge losses on these wind farm works. I think with the pivot toward renewables, all of the contractors sort of [Indecipherable] going over the cliff chasing the same contracts and the margins were just squeezed to that. I think where we are going to focus going forward is on the less capital intensive but specialty niches providing support both in the construction support and then upstream in the site clearance area with the future toward developing O&M wet VOP capabilities. So that's where our strategy lies.

Igor Levi -- BGIT Research -- Analyst

Great, thank you. I'll turn it back.

Operator

Thank you. [Operator Instructions] Our next question comes from the line of David Smith with Pickering Energy Partners. Please proceed with your question.

David Smith -- Pickering Energy Partners -- Analyst

Good morning and thank you for taking my question. So first I wanted to say congratulations on getting to net debt neutrality. I hope it's not too early to ask this, but just given the improving outlook for your well intervention assets especially into 2003, wanted to ask how you think about the merits of share repurchases versus a regular dividend or maybe a special dividend.

Owen Kratz -- President and Chief Executive Officer

I'm stuttering because that's actually a Board decision and I don't want to speak for the Board. But my personal opinion is that I don't think that you'll see us establish a regular dividend. The dividend just paid to be a special dividend. My personal preference is I'd like to see share repurchase, but I think most shareholders would prefer to see dividends. So I think going forward, you would see some kind of a hybrid blend.

David Smith -- Pickering Energy Partners -- Analyst

Okay. Appreciate that. And the second, just regarding the updated guidance, kind of a wide range in the implied Q4 well Intervention revenue. If I think about that range, it kind of feels like the low-end would have some schedule slippage versus your expectation. It seems like to get to the high end with meaningful utilization and Gulf of Mexico and West Africa. Does that sound right or does your high-end revenue and well intervention assume some work in the North Sea.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

No, I think you're directionally correct and how you're looking at this. We -- the Gulf of Mexico market in the fourth quarter has really solidified for us and so I think we expect strong utilization there. In the West Africa region. I think we definitely have a path toward strong utilization. I think there is still some exposure there. So I think that's why you see the wide range.

David Smith -- Pickering Energy Partners -- Analyst

Appreciate it. And if I could just sneak one last one is just thinking into 2003 and the opportunity for riser based P&A and decommissioning in the North Sea, is it fair to think about the Siem Helix vessels as relatively competitive there compared to the Q7? Or is it the difference in whole shape going to reduce the operating window of Seim Helix vessels versus the Q7.

Owen Kratz -- President and Chief Executive Officer

There is a difference between the capabilities of the two vessel fleets. The two vessels in the North Sea or riser less vessels.

David Smith -- Pickering Energy Partners -- Analyst

No, no, I'm very sorry I was thinking about the Siem Helix vessels, as potentially the Seim Helix 1 as potential candidate.

Owen Kratz -- President and Chief Executive Officer

Oh, Q versus Q. I think capability wise, they're very similar so we can mix and match and ship the fleet around. In fact, we've got potential for a vessel in the UK, a vessel in West Africa, multiple vessels in Brazil, a vessel in Asia Pacific and Canada and the Med have opportunities. So we have a large geographic area to try and cover with 3 vessels. I mean, I think they are fungible to a certain extent. We are starting to take steps to qualify the vessels in all the regions, because the North Sea, you have to have our special safety case in order to operate there. Australia is the same. So we are starting to get all of the certifications in place for all three vessels to be able to work in all regions.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Technically, the top sides on the vessels are exactly the same, it's the same towers. It's the same skidding systems, the same safety systems, same walk to work systems. So exactly the same equipment that can be utilized.

David Smith -- Pickering Energy Partners -- Analyst

No, that's what I was just wondering if the ship shaped all of the Siem Helix vessels versus the semi [Indecipherable] the Q7000 made a difference, and yeah how long in the year. Yeah, each vessel could participate in the North Sea.

Owen Kratz -- President and Chief Executive Officer

The primary difference is in transit speed. Semisubmersible has perhaps better motions when stable but transits at a slower speed, although the Q7000 was designed with ship shaped [Indecipherable] so they want to step upon its pontoon it's able to achieve a higher transit speed in most semisubmersibles. But the monohull Seim vessels are much faster in transit. So as far as [Indecipherable] to the different regions of the world, it's probably more accurate to think of the Q7000 covering a strong demand single region or 2 regions and then the SH vessels transiting quickly to cover the rest.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Thank you all for your time.

Operator

Thank you. Thank you. And we do have a follow-up question from the line of James Schumm from Cowen. Please proceed with your question.

James Schumm -- Cowen and Company -- Analyst

Hey, thanks for letting me back in. So I was wondering if you could help I mean, you think about what utilization is needed for let's say the Siem Helix 1to be breakeven. So it's going to be dependent on day rate. So maybe pick a day rate, don't tell me what it is, but is there any way you can help me think about what the minimum level of utilization, you need is to get that vessel to be breakeven for you.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

It's going to depend on the type of work we take on James. So you have well Intervention and we should get to breakeven, but right now to get through this winter we're targeting [Indecipherable] that will be in construction support a wind farm supports or even sort of type support. So in our first part of the year we're definitely going to have, I'd say strong utilization, but the rates won't supports a breakeven position. then it will depend on how quick we can get the vessel back into the well intervention market and like we've said we're chasing work, so that in the North Sea and Angola. So it's really dependent on the merits of work we take on.

James Schumm -- Cowen and Company -- Analyst

Okay and then just I guess lastly for me, what does the vessel maintenance and dry-dock schedule look like next year relative to this year. I think you just mentioned you pushed some capex into 2022. So any early thoughts on what CapEx might look like next year would be much appreciated.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Yeah. So I think in general, Jim. We have talked about in the past high level that our capex is $20 million to $40 million per year in that range. I think this year we'll probably going to be at the lower end, because as we mentioned, some of our capex spending has been pushed. I think that next year will probably be a little bit heavier dry-dock year. We have the Q4000 has a scheduled one, the Siem Helix 2, the HP1 and I think the Well Enhancer as well as the Seawell. So it is going to be a heavier year. So I think we'll probably be on the higher end of the range that we provided to maybe even exceeded a little bit just because of the capex that has been pushed into '22.

James Schumm -- Cowen and Company -- Analyst

Great, thank you very much guys.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

James, if it's OK, I'll just get back to your first question, I just wanted to point out, I should have told earlier that our cost base in the various different modes is wildly different. When we are in intervention mode, we have 140 people on the vessel. When we're in construction support, wind farm support, trenching, we're going to have less than 40 people on the vessel. So it will be, there is less, but the cost basis will be different as well.

James Schumm -- Cowen and Company -- Analyst

Okay, great. Thanks Scotty.

Scotty Sparks -- Executive Vice President and Chief Operating Officer

Thank you.

Operator

Thank you...

Owen Kratz -- President and Chief Executive Officer

I think just a follow-on on that, I think it's worth noting that we see -- that's why I called '22 a transition year because I think we'll need to do that with the Siem Helix 1 vessel for '22 and then by '23 I would expect the vessels to all be back into full intervention mode.

Operator

Thank you. And we do have another follow-up question from the line of David Smith from Pickering Energy Partners. Please proceed with your question.

David Smith -- Pickering Energy Partners -- Analyst

Hey, thanks to let me back in. Owen, just wanted to circle back to your comments about the strategy to increase free cash flow. I think that third pillar you mentioned was to reduce the cost structure. I'm wondering if you could help us with any color on maybe what item have been identified, maybe the magnitude of what you're targeting.

Owen Kratz -- President and Chief Executive Officer

It's a bit early to mention everything, but one thing I'll mention is a continuation of our program in conjunction with our former J-lines to cross train personnel, so that we can reduce personnel on board. That's only possible because we alliance and the single point contracting nature of what we offer the clients, but that would have the ability to lower our offshore operating costs.

David Smith -- Pickering Energy Partners -- Analyst

Alright, appreciate it and look forward to when you can tell us more of the [Indecipherable] plans. Thank you.

Operator

Thank you. And we do have another follow-up question from the line of James Schumm from Cowen. Please proceed with your question.

David Smith -- Pickering Energy Partners -- Analyst

If you guys don't close the call. I'm just going to keep going on here, I'm just kidding. So I guess lastly and I promise it's my last one. Is there any commentary on robotics as a whole? I mean you guys have talked about it just just directionally for next year, I mean it seems like a lot of renewables work is picking up. Is there anything you can offer in terms of like your visibility going into '22 versus what it was last year or just anything to help us gauge how this business looks next year would be great.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Hi, David. So I would say, we are seeing improving year from next year. Certainly one of the vessels will be in APAC region and a full contract for the year. So that's stable as it is this year. And we've also got that large decommissioning project in Thailand that we will carry on into Q1 and potentially further. For the UK, Europe, West Africa, renewables area, we're definitely seeing an increase in traction. We have awards that will most likely see us take on a second trenching vessels. So we should see an improved area there. There is a lot more tender activity on the Boulder clearance side and site survey and prep. So we expect to pick up some of those works. We've been doing a very good job in those projects that we've undertaken and starting to build quite a good reputation. So see increasing ROV activity as well. A lot of our ROVs that we're investing for oil and gas work and low utilization now forming over into the wind farm markets as well. So we should see an improvement. Not sure yet how much of improvement. It's not going to be a vast improvement but it will be an improvement.

David Smith -- Pickering Energy Partners -- Analyst

Okay, thanks so much. Appreciate it.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. And there are no further questions at this time.

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Thanks for joining us today. We very much appreciate your interest and participation and look forward to having you on our fourth quarter 2021 call in February of '22. Thank you. Thank you. [Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Erik Staffeldt -- Executive Vice President and Chief Financial Officer

Ken Neikirk -- Senior Vice President, General Counsel and Corporate Secretary

Owen Kratz -- President and Chief Executive Officer

Scotty Sparks -- Executive Vice President and Chief Operating Officer

James Schumm -- Cowen and Company -- Analyst

Igor Levi -- BGIT Research -- Analyst

David Smith -- Pickering Energy Partners -- Analyst

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